Article
Chick-fil-A continues to peck away at breakfast market share
With product giveaways and a marketing push, the chain works to convince consumers that chicken is not just for dinner anymore.
May 25, 2009
Chick-fil-A has seen amazing results with its iconic chicken sandwich, which has driven systemwide sales gains since it opened in 1967. Last year, even as the recession hit, the company reported double-digit sales growth and a 4.59 percent increase in same-store sales.
Yet the chain continues to find that its breakfast daypart is not on the menu for many consumers, despite its stand-alone stores offering it for more than 20 years. In fact, a leading industry analyst for market research firm The NPD Group was unaware of the chain's morning menu despite knowledge of the company overall.
"While (the breakfast daypart) is still growing, it is still a great challenge that we have," said Mark Baldwin, spokesman for Chick-fil-A.
That challenge is two-fold, including increasing awareness among its regular lunch and dinner customers. The bigger challenge, however, may be convincing consumers that chicken is breakfast food.
"Even here in the South, some people just can't fathom eating chicken for breakfast,"Baldwin said.
Breakfast promotions
Chick-fil-A began offering breakfast when it opened its first stand-alone store in 1986. Now the chain has more than 820 stand-alones. Its most popular breakfast items are the Chicken Biscuit and Chick-n-Minis, with its chicken nuggets on a yeast roll brushed with honey butter.
The brand relies on an annual quarterly breakfast promotional campaign to push its morning daypart. But instead of a TV ad blitz, the company relies on product giveaways to draw attention to the brand and increase sampling.
"We choose to lead with food rather than lead with advertising,"Baldwin said. "We'll never compete with our competitors on national advertising. We think our food is the best advertising you can do, so we view it as pure marketing."
Chick-fil-A kicked off this year's three-month promotion Jan. 1 with a chain-wide offer of an in-store coupon for a free breakfast sandwich. Individual store operators then came up with their own giveaway offers throughout the rest of the period.
Giveawaysdiffered by market, with area operators often joining together to develop a promotion. Some stores offered a different breakfast item one day a week over the three months. Others held "Pay Once Eat Twice" promotions in which customers returned with their receipt on a designated day for the same menu item for free.
While Chick-fil-A supplements any system-wide giveaway, individual operators are responsible for covering the cost of any local promotion.Baldwin said operators are willing to absorb the cost because the chain does not have a large marketing budget.
Growing breakfast sales
"Breakfast, overall, is a habitual daypart," he said. "We were trying to capitalize on that and doing these free breakfast giveaways — it's the best sampling you could ever do. It created a lot of buzz and excitement in the community. In a lot of cases, it surprised and wowed our customers."
Bonnie Riggs, restaurant industry analyst for The NPD Group, said concentrating on growing breakfast sales is a wise move.
The breakfast daypart accounts for 23 percent of quick-serve restaurant sales, with the burger/sandwich segment leading the category, NPD research found. The firm's most recent data gathering found that breakfast was up 1 percent in QSRs for December 2008 – February 2009 over the same period last year.
"The breakfast daypart for QSR holds up better in difficult times than any other daypart," Riggs said. "Between breakfast and snack, that's what's been driving QSR growth for the last couple of years. In the most recent (quarterly reporting), it is the only daypart that is positive."
Healthy offerings test
Riggs agreed that consumers tend to follow a morning routine when choosing where to purchase their breakfast. But the convenience factor is even more important. Consumers visit brands whose stores fit their schedule, provide quick service and offer grab-and-go products.
NPD's research found that prior to the recession, breakfast had become a "three-plus food and beverage" occasion. Consumers started with something quick at home, then went through a drive-thru for something more and on to another place for a beverage.
Another driver of the breakfast category's growth is consumers' belief that it is a healthy jump start to the day, Riggs said.
Chick-fil-A is looking to add to its breakfast offerings and is testing low fat menu items in three markets. The chain does offer some better-for-you items, including bagels and a fruit cup.
Baldwin said the company is answering consumers' requests for additional healthy breakfast items bytestingfruit-and-yogurt smoothies and a yogurt parfait inKnoxville, Tenn., Austin, Texas, andIndianapolis.
The smoothies, which will be made on the same equipment used to make the chain's shakes, are offered all day but promoted at breakfast.
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Riggs said now may not be the best time to be testing smoothies, with consumers concerned about price point. Chick-fil-A's smoothies are testing at $3.79 for a 14 ounce and $4.85 for a 20 ounce.
Yogurt, however, has lots of potential, especially for breakfast, yet few QSRs have it on their menu, she said. The challenge with that product is keeping it competitively priced with grocery yogurt price points. Chick-fil-A has its Yogurt Parfait priced at $2.19.
Whether it's with yogurt or other menu items, Chick-fil-A will continue its steady focus on increasing its share of the breakfast market,Baldwin said.
"Really, it's a growing process," he said. "We know we're not going to double our breakfast sales overnight. As long as we keep building the momentum — it's a marathon, not a sprint, is the way we view it."
Read also,Getting the most of out a giveaway.
